When you buy a life insurance policy, you’ll have a contract that requires the insurance company to pay a predetermined amount to your beneficiaries when you die. For approval, an insurance underwriter will review the way that you live to establish your life expectancy. In addition, insurance companies attempt to bill you enough to cover the funds that they will eventually pay to your policy’s recipients.
To determine your premium, the insurance company will assess your health. Keep in mind that you’ll likely pay more for insurance when certain risk factors are present in your life. For instance, smoking cigarettes or cigars will increase your insurance premiums. Insurance companies will also consider your personal health. Therefore, if you suffer from obesity or diabetes, then you should expect to pay more for insurance. Other factors that could result in a higher insurance premium include a family history of cancer or a personal cancer diagnosis.
Your hobbies may also cause you to pay a higher premium for your life insurance. Dangerous hobbies include riding motorcycles, skydiving and mountain climbing. If you’re in the military, then traditional life insurance companies will usually add a war clause, which denies coverage for death during acts of war, into your policy. However, military branches have insurance options available for soldiers.
Additional Insurance Premium Factors
Insurance companies will also determine your rates according to your age, health and gender. Before you can set up an insurance policy, you should expect to share your medical history with the company, and to cover you, they may require that you have a physical examination. Be sure to give the insurance company accurate information about your health because if you mislead your underwriter, then the company may cancel the insurance. Your death benefits can also be denied if you neglect to tell the insurance provider about risky behavior that could cause your death.
Uncontrollable Risk Factors
There are several risk factors that you cannot control such as your gender. According to research, women live longer than men. Therefore, they usually have lower life insurance rates. However, men may pay a lower amount on an annuity. Younger people will pay lower insurance premiums than older people since they are usually healthier. Also, your family history may affect your life insurance rates.
Life Insurance Tips
By knowing how insurance companies determine premiums, you can compare costs and coverage to find the best supplier. Keep in mind that life insurance will provide peace of mind for you and those you love.